FW: Capital Flows into Environmental Hedge Funds
I thought you might all find this interesting in light of what Rob from the Climate Exchange had to say…
From: Mark Youngblood [mailto:myoungblood@...]
Sent: Friday, September 07, 2007 10:49 AM
To: Kendall Youngblood
Subject: Capital Flows into Environmental Hedge Funds
RMF Launches Environmental Fund of Hedge Funds
By Bill McIntosh, Senior Financial Correspondent | Wednesday, September 05, 2007
LONDON (HedgeWorld.com)—RMF Investment Management, the Swiss-based fund of hedge funds subsidiary of Man Group plc, has committed $25 million to launch what it is billing as the first fund of funds investing solely in environment-related assets and strategies.
The RMF Environmental Opportunities Fund is targeting investment across four sub-sectors: carbon and emissions trading, water resources and infrastructure, clean technology and renewable energy. The fund has six underlying managers with strategies running from equity long/short to commodities and multi-strategy, though it is expected to grow to 10 to 15 holdings.
"Environmental hedge funds offer great profit potential, but the challenge for us, initially, was to find enough liquid strategies with institutional-quality managers," said Michelle McCloskey, head of the New Alternatives Group at RMF, in a statement. "When we started looking at the market over a year ago, only a handful of these hedge funds existed."
"Over the past year, liquidity in both the equities and futures markets has increased dramatically and we have seen a corresponding increase in the number of fund offerings in the sector," she said. "With over 35 hedge funds to choose from, we now are confident that the market is scalable and that the managers are here to stay."
The fund is aimed at institutional investors and will target returns of three-month LIBOR plus 8%-10% with medium-level volatility. It has been funded with $18.1 million in proprietary capital from RMF and $7 million from one of RMF's multi-strategy products.
The New Alternatives Group is located in New York , Switzerland and London and accounts for five of RMF's 33 investment analysts. The team has focused its research and development efforts on the environmental sector.
Research focuses on activities that optimize the use of natural resources, reduce ecological impact, improve efficiency or arise from environmental regulation. The investments made by the fund will concentrate mainly on the interrelationship between emissions and toxicity reduction, renewable energy credits and energy efficiency.
The fund launch underscores the growing investor interest in climate change and the demand for increased investment for development in these areas. Until recently, Ms. McCloskey noted, environmental investments were primarily of long-only character with long lock-up structures.
The new fund is targeting institutional investors and has a $500,000 minimum investment. There is an initial one-year lock-up followed by monthly redemption.
Founded in 1992, RMF now manages more than $25 billion in assets, serving mainly institutional investors. It is headquartered in Pfäffikon , Switzerland .